Tacoma Employees Retirement System LRWL Inc. …cms.cityoftacoma.org/retirement/boarddocuments/LRWL...

Copyright © 2015 LRWL Inc. All Rights Reserved. Copyright © 2015 LRWL Inc. All Rights Reserved.

Tacoma Employees Retirement System

LRWL Inc. Presentation

March 12, 2015

Copyright © 2015 LRWL Inc. All Rights Reserved.

LRWL Chris Fikes – Project Director Ben Lott, CPA, PMP – Vice President

Introductions

2


Agenda Topics

LRWL Experience LRWL Project Deliverables for TERS

Recap of Deliverable 3 Recap of Deliverable 4 Recap of Deliverable 5

Strategic Roadmap – 3 Options Option 1 – New Pension Administration System Option 2 – Major SAP Initiatives and Supporting Projects Option 3 – Status Quo

Next Steps / Path-Forward Questions and Answers LRWL Recommended Alternative

3


Our Corporate Mission “To assist public retirement systems in exceeding

the expectations of their customers. We do this by providing the most experienced and professional staff in the industry.”

Founded 1981 - Technology and management consulting firm Since 1994 - focused exclusively on

supporting the public pension industry Retirement Benefits administration

LRWL Experience - Background

4


LRWL “Corporate Experience”: 70+ clients

LRWL Staff “Individual Experience” – prior to joining LRWL: 60+ clients

LRWL is among the largest firms of its type that specializes in Technology and Management consulting for the public pension industry (we don’t do any implementations or programming or coding – avoid conflict of interest)

20 highly qualified, highly experienced professionals on staff

5

LRWL Experience - Background

Copyright © 2015 LRWL Inc. All Rights Reserved. 6

LRWL Experience – All Clients


At one extreme, we are proud to point out that of the 20 largest

public pension systems in the US, more than half have utilized LRWL’s services in major projects related to meeting their strategic goals – CalSTRS, NYSLRS, NJDPB, NCRSD, etc.

…But perhaps more important, at the other end of the spectrum is

the list of LRWL’s 20 similar sized clients that are more comparable and closer peers to TERS

Our experience has shown that pension systems with fewer than 20,000 participants tend to have many similarities; we use that criteria for comparisons

7

LRWL Experience – TERS Specific


LRWL Experience: Similar Sized Clients

Retirement System Port

folio

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A-B

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Ana

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s /

BPR

B-E

valu

atin

g

Exis

ting

PAS

C-R

FP

Cre

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r C

usto

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FP fo

r PA

S So

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ata

Con

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5 Ex

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umen

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San Bernardino County ERA 5.0 29.9 30

Milwaukee ERS 4.0 26.8 40

Los Angeles Fire and Police PS 15.7 25.8 125

District of Columbia RB 4.2 24.9 48

Colorado FPPA 3.4 23.7 25

Fairfax County ERS 2.5 22.4 32

San Diego City ERS 3.8 20.2 60

Alameda County ERA 5.2 20.1 82

Denver ERP 1.7 19.3 25

Contra Costa County ERA 5.0 18.6 37

Virgin Islands GERS 1.3 18.2 89

Baltimore ERS 2.1 19.2 24

Kern County ERA 2.3 15.9 20

Austin ERS 1.7 11.5 14

City of San Jose DRS 4.6 11.2 34

San Mateo County ERA 2.7 10.5 20

Fort Worth ERF 2.0 10.3 19

Tulare County ERA 0.9 8.2 9

Sonoma County ERA 1.3 8.1 15

City of Springfield CRS 0.3 7.7 4

City of Fresno RS 2.1 5.8 14

Tacoma CERS 1.4 5.6 7

El Paso Firemen & Policemen’s PF 0.9 3.3 5

Charlotte Firefighters’ RS 0.3 1.5 3


Current business and systems assessments

Strategic technology planning

Business case development, needs / feasibility analysis

Best practices identification and implementation assistance

Business process re-engineering

Organizational change management – including planning, participating, and facilitating 9

LRWL Experience – Core Project Activities and Tasks

RFP development Procurement assistance Contract negotiations QA - Quality Assurance PM – Project Management OPM – Oversight Project

Management IV&V – Independent Verification

and Validation Testing planning and assistance Data cleansing analysis Imaging and workflow support Employer reporting change

support Staff augmentation


Deliverable 1: Project Workplan Deliverable 2: Project Status Reports Deliverable 3: Current Technology Assessment Deliverable 4: Business Processes and Best Practices Deliverable 5: Strategic Roadmap Deliverable 6: Summary Report / Board Presentation

Note that Deliverables 3, 4 and 5 are included as supporting material to this Summary Report / Board Presentation.

10

LRWL Project Deliverables for TERS


Overview of TERS Organization Identify Existing TERS IT Projects Trends

Public Retirement System Trends Private Sector Financial Services Industry Trends Technology Trends

Current Technical Environment LRWL Analysis and Recommendations

Five (5) Short-Term Improvements Two (2) Mid-Term Improvements Six (6) Long-Term Improvements

11

Recap of Deliverable 3 Current Technology Assessment


TERS Business Processes and Best Practices Evaluation of twenty (20) TERS business processes

resulting in individual high-level summaries, as-is process flow diagrams and LRWL provided process-specific best practice recommendations

Level of Automation and Transaction Volume Assessment of the level of automation that exists today at

TERS and the transaction volume for those identified processes.

LRWL Global Best Practice Principles A listing and overview of seventeen (17) best practice

principles seen in the Retirement System industry.

12

Recap of Deliverable 4 Business Processes and Best Practices


LRWL has been working with TERS to understand their existing business, their existing technology and solutions, and more importantly their vision for the future of their organization

Staff indicted and expressed their concern that often their work requires additional manual and/or spreadsheet verification in order to ensure accuracy and completeness

A Visioning Session with TERS staff and LRWL resulted as to what the future may look like for TERS

The Strategic Roadmap resulted in three (3) primary initiatives / options regarding TERS information processing environment: Option 1 – New Pension Administration System Option 2 – Major SAP Initiatives and Supporting Projects Option 3 – Status Quo.

13

Recap of Deliverable 5 Strategic Roadmap


Each alternative was described along with the expected benefits, envisioned challenges, projected timeframe, and projected costs

Overall intent was to provide information and alternatives for consideration; so that a decision or formal direction could be made by the TERS Board of Administration.

14

Recap of Deliverable 5 Strategic Roadmap


Description A new pension administration system (PAS) would enable TERS staff to:

Perform all of their duties associated with their business operations in a single commercial off-the-self (COTS) solution

With full retirement-industry capabilities Including peripheral features such as imaging, workflow, case

management and correspondence generation. These solutions exist in the marketplace and are all browser-based thus

allowing for participant (i.e., members, annuitants, etc.) to perform their own self-service capabilities

This alternative includes the following steps: Develop a comprehensive Request for Proposals (RFP) Conduct a formal procurement Implement a stable, state-of-the-industry, fully integrated solution

capable of supporting TERS mission well into the future. There are probably 4 to 6 vendors who would be interested in the TERS

project.

15

Strategic Roadmap – Option 1 New Pension Administration System


Expected Benefits Improved service levels to members Improved management of member, retiree and employer

information Improved accuracy of all information collected, maintained, and

provided by the retirement system Improved timeliness and accuracy of responses to members'

inquiries Improved system audit and control capabilities Improved management reporting features Increased and improved Web-based, self-service functions to

members, retirees, and employers

16



Expected Benefits (continued) A secure environment for the receipt and transmittal of information

(data) related to members, retirees, and employers Continuous upgrade, new versions and releases provided by vendor Seamless integration of pension administration, imaging, workflow,

CRM, ad-hoc reporting, and other peripheral components Incorporated into a peer, user-group community of other system

users (i.e., clients) of the same solution – allowing for participation and involvement in future product features, enhancements and vendor annual conferences

Positioned for the next evolution of technology where the vendors are already enabling their solution for access and processing via mobile devices.

17



Challenges The cost is more expensive than other options It requires more staff time to work with the solution provider over

the course of the project Learning curve involved for staff to understand new solution, new

technology, new capabilities, etc. Limited marketplace and solution offerings available Potential for obsolescence of vendor over time.

18



Proposed Timeline

19


Project Activity Tentative Start Date

Tentative End Date

Projected Duration

RFP Development 4/1/2015 8/31/2015 5-months

Procurement Process / Contract Negotiation

9/1/2015 2/28/2016 6-months

Pension Administration Project 3/1/2016 8/31/2018 30-months

3rd Party Project Management / OPM / QA 3/1/2016 8/31/2018 30-months

Post-Implementation Support 9/1/2018 Ongoing Ongoing

City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing

Additional IT and/or TERS Staff 1/1/2016 Ongoing Ongoing


Projected Costs

20


Project Activity Projected Cost (Low)

Projected Cost (High)

Projected Cost (Average)

One-Time Costs: RFP Development $100,000 $150,000 $125,000 Procurement Process / Contract Negotiation $30,000 $50,000 $40,000 Pension Administration Project $3,000,000 $7,000,000 $5,000,000 3rd Party Project Management / OPM / QA $500,000 $1,000,000 $750,000 TOTAL One-Time Costs $3,630,000 $8,200,000 $5,915,000 Annual Recurring Costs: Post-Implementation Support $200,000 $600,000 $400,000 City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000 Additional IT and/or TERS Staff $125,000 $175,000 $150,000


Projected Costs – Comparable Systems

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SYSTEM 1 (2014)

SYSTEM 2 (2013)

SYSTEM 3 (2012)

SYSTEM 4 (2011)

SYSTEM 5 (2009)

Number of Agency Employees 14 21 35 11 10

Number of Employers 1 3 1 1 3

Number of Active Members 8,387 5,100 5,900 3,669 5,000

Number of Retirees 4,831 4,300 4,900 2,267 2,000

Non-Recurring Project Costs

Hardware Hosted $231,119 Hosted Hosted $65,063

Commodity Software $46,929 $580,379 Hosted Hosted $78,266

Implementation Services $3,486,577 $6,411,977 $5,921,884 $2,052,650 $2,456,005

Software License n/a $975,000 n/a $242,800 $260,000

Total: Non-Recurring Project Costs $3,533,506 $8,198,475 $5,921,884 $2,295,450 $2,859,334


Description A series of SAP initiatives and other supporting projects which, when

bundled together, could be accomplished by TERS, the City of Tacoma IT, and other 3rd party vendors / consultants

These initiatives would require dedicated staffing and project funding in order to complete them in a reasonable timeframe

The initiatives would build-upon and enhance the current offerings of the SAP solution

The supporting projects would provide peripheral benefits to the TERS business operations

The benefit would be to leverage what exists today (i.e., SAP) and build upon it as needed

With the understanding that it would not be a full Pension Administration System (PAS).

22

Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects


Expected Benefits Staff has an existing familiarity with SAP TERS has a good working relationship with City of Tacoma IT Implementation of ECMS / Imaging can be conducted as a stand-

alone project with a defined scope. Solution will provide online access for TERS staff to participants’ documents; as well as provide TERS with an overall document retention and backup solution of critical information

Increased and improved Web-based, self-service functions to members, retirees, and employers

Project(s) may be completed in less time than a new pension administration system as the scope is less

Project should be less expensive than a new pension administration system.

23



Challenges TERS is still reliant on SAP which is not a full-functioning Pension

Administration System There may continue to be conflicting priorities between / among the

various city departments so TERS may not have a fully dedicated team on their project(s)

Staff will not get all the functionality and features envisioned as they expressed during the Visioning Sessions (i.e., automation, future product enhancement, seamless solution integration, etc.)

The projected timeframes and projected costs contained within this alternative are less certain due to limited “data-points” for comparison purposes

If the project experiences any problems and/or delays there are limited alternatives available to TERS to leverage completion.

24



Proposed Timeline

25



Tentative End Date

Projected Duration

Electronic Content Management System (ECMS)

4/1/2015 12/31/2015 9-months

Member Self-Service 4/1/2015 12/31/2015 9-months Workflow Management System (WMS) 4/1/2015 12/31/2015 9-months Workflow Management System (WMS) – Leverage General Government & TPU Effort (2017/2018 Biennial Budget)

1/1/2017 9/30/2017 9-months

In-House, Online Pension Calculator 4/1/2015 12/31/2015 9-months Centralize Numbering System in SAP 4/1/2015 7/31/2015 4-months Employer Self-Service 4/1/2015 5/31/2015 2-months City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing 3rd Party Project Management / OPM / QA 4/1/2015 3/31/2016 12-months


Projected Costs

26


Project Activity Projected Cost

(Low)

Projected Cost

(High)

Projected Cost

(Average) One-Time Costs: Electronic Content Management System (ECMS)

$75,000 $125,000 $100,000

Member Self-Service $100,000 $200,000 $150,000 Workflow Management System (WMS) $75,000 $125,000 $100,000 In-House, Online Pension Calculator $100,000 $300,000 $200,000 Centralize Numbering System in SAP $50,000 $150,000 $100,000 Employer Self-Service $10,000 $40,000 $25,000 3rd Party Project Management / OPM / QA $200,000 $300,000 $250,000 Total One-Time Costs: $610,000 $1,240,000 $925,000 Annual Recurring Costs: City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000


Description This alternative would be for TERS to keep doing what they do

today (i.e., status quo) TERS would continue to work with the City of Tacoma IT to prioritize

projects and complete them Historically under this approach a few projects are completed

periodically pending the needs of TERS and the City of Tacoma’s IT availability

As projects get completed; new projects are added and it is a continuous process of reviewing and re-prioritizing the projects.

27

Strategic Roadmap – Option 3 Status Quo


Expected Benefits The expected benefit of this alternative is that all parties are familiar

with the process, the people and the reduced scope of complexity TERS is able to request projects and then pending their review and

prioritization; the City of Tacoma IT works on those projects and completes them accordingly

This approach uses very little resources (i.e., 1 or 2 people from the City of Tacoma IT)

This approach has minimal specific project cost other than the yearly IT assessment charges.

28



Challenges TERS is still reliant on SAP which is not a full-functioning Pension

Administration System There may continue to be conflicting priorities between / among the

various city departments Staff will not get all the functionality and features envisioned as they

expressed during the Visioning Sessions (i.e., automation, future product enhancement, seamless solution integration, etc.)

The projected timeframes and projected costs are less certain due to limited “data-points” for comparison purposes; however most items are essentially at a $0 cost as they are worked on as time permits

29



Challenges (continued) There will always be new initiatives / competing priorities and thus

certain items on the list will remain on the list indefinitely without any certainty for completion

TERS staff frustration not only with the existing system but also with the uncertainty for when “help will be on the way” due to the continuous re-prioritization of outstanding items.

30



Proposed Timeline

31



Tentative End Date

Projected Duration

City of Tacoma Employee Self Service (ESS)

2/1/2015 10/31/2015 9-months

Membership Eligibility Table 2/1/2015 4/30/2015 3-months Notification Mechanism 2/1/2015 10/31/2015 9-months Reporting Tool 2/1/2015 1/31/2016 12-months Letter Generation 2/1/2015 1/31/2016 12-months Health Department Data Maintenance & Record Keeping

2/1/2015 3/31/2015 2-months

Electronic Content Management System (ECMS)

TBD TBD TBD

Member Self-Service TBD TBD TBD Workflow Management System (WMS) TBD TBD TBD In-House, Online Pension Calculator TBD TBD TBD Centralize Numbering System in SAP TBD TBD TBD Employer Self-Service TBD TBD TBD City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing


Projected Costs

32


Project Activity Projected Cost (Low)

Projected Cost (High)

Projected Cost (Average)

One-Time Costs: City of Tacoma Employee Self Service (ESS) $0 $0 $0 Membership Eligibility Table $0 $0 $0 Notification Mechanism $0 $0 $0 Reporting Tool $0 $0 $0 Letter Generation $0 $0 $0 Health Department Data Maintenance & Record Keeping

$0 $0 $0

Electronic Content Management System (ECMS) $75,000 $125,000 $100,000

Member Self-Service $0 $0 $0 Workflow Management System (WMS) $0 $0 $0 In-House, Online Pension Calculator $100,000 $300,000 $200,000 Centralize Numbering System in SAP $50,000 $150,000 $100,000 Employer Self-Service $0 $0 $0 Total One-Time Costs: $225,000 $575,000 $400,000 Annual Recurring Costs: City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000


Next Steps / Path-Forward Discuss any concerns or questions regarding each of the Options Make a decision or provide formal direction on which Option to

pursue Further refine the exact scope of the selected Option Build a workplan Execute against the workplan Report against the workplan.


Questions????

34


LRWL Recommended Option LRWL recommends Option 1 New Pension Administration System based upon: The Industry Trends in the Marketplace The Limitations of the Current Technical Environment The Industry Best Practices and Guiding Principles The Limited Levels of Automation and Reliance on Manual /

Spreadsheet Processing that Exists Today This Approach having a Defined Path with Reliable Activities based

upon Comparable Timeframes and Costs Overall Concern that if this option is not chosen by TERS today it

still may be chosen a few years down the road…so why wait Our Understanding of the TERS Organization and Business

Processes


LRWL Recommended Option LRWL recommends Option 1 New Pension Administration System based upon (continued): Our Understanding of the Existing TERS IT Projects Our Corporate Experience and Expertise Our Work with Other Retirement Systems The Value of TERS being part of a User-Group with their Peers that

use the same Pension Administration System Continuous Upgrades and New Releases Assurances and Protection should the City of Tacoma every move-

away from the use of SAP Built-in Best Practices, Process Automation and Seamless

Integration.

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